Question

On January 5, 2017, Headland Corporation received a charter granting the right to issue 5,400 shares of $100 par value, 9% cumulative and nonparticipating preferred stock, and 52,900 shares of $10 par value common stock. It then completed these transactions.

Jan. 11		Issued 20,100 shares of common stock at $15 per share.
Feb. 1		Issued to Sanchez Corp. 4,200 shares of preferred stock for the following assets: equipment with a fair value of $49,600; a factory building with a fair value of $159,000; and land with an appraised value of $257,000.
July 29		Purchased 1,800 shares of common stock at $18 per share. (Use cost method.)
Aug. 10		Sold the 1,800 treasury shares at $13 per share.
Dec. 31		Declared a $0.30 per share cash dividend on the common stock and declared the preferred dividend.
Dec. 31		Closed the Income Summary account. There was a $173,800 net income.

For a) I need help with the entry for Declared a $0.30 per share cash dividend on the common stock and declared the preferred dividend

(b) Prepare the stockholders

Answer 1

(a)

Date	General Journal	Debit	Credit
Dec. 31	Retained earnings	43830
	Dividends payable*		43830
	(To record the declaration of cash dividends)

*Dividends payable:

On preferred stock = 4200 x $100 x 9% = $37800

On common stock = 20100 x $0.30 = $6030

Total dividends payable = $6030 + $37800 = $43830

(b)

Headland Corporation
Statement of Stockholders' Equity
December 31, 2017
Capital stock:
Preferred stock-par value $100 per share 9% cumulative and non-participating, 5400 shares authorized, 4200 shares issued and outstanding		420000
Common stock-par value $10 per share, 52900 shares authorized, 20100 shares issued and outstanding		201000
Total capital stock		621000
Additional paid-in capital:
Paid-in capital in excess of par-preferred	45600
Paid-in capital in excess of par-common	100500
Total paid-in capital		146100
Retained earnings*		120970
Total stockholders' equity		888070

*Retained earnings = $173800 - $9000 - $43830 = $120970